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GAM, the Swiss fund house that is being targeted by an activist investor, has suffered a large-scale rebellion at its annual meeting over executive pay, but managed to thwart a bid to overhaul its board.

Angry shareholders voted overwhelmingly to reject GAM’s non-binding report on pay, with 54.24 per cent of votes against and just 17.57 per cent of votes in favour. They also voted against plans for up to SFr16m of bonuses for management in 2107.

The rebellion came after CEO pay at the fund house jumped by more than 20 per cent in 2016 despite profits falling by more than a third.

Shareholders also voted against the reappointment of Diego du Monceau to the compensation committee, after several big advisers to investors highlighted a lack of transparency in the company’s executive pay practices.

But Switzerland’s largest listed fund house saw off attempts to shake-up its board, with shareholders rejecting directors proposed by RBR Capital, an activist investor that targets underperforming companies.

RBR, which has amassed an estimated 4.4 per cent stake in the company, had proposed three new board directors, including nominating Kasia Robinski, a private equity executive, to become chair of the board.

Ms Robinski received 43 per cent votes in favour of her nomination to the board, while about a quarter of shareholders backed the nomination of Rudolf Bohli, founder of RBR Capital.

Instead, shareholders backed GAM’s proposal to appoint Hugh Scott Barrett, a long-standing board member, to become chairman of the company, replacing Johannes de Gier, who has retired.

At the annual meeting this morning, Mr Barrett promised a “root and branch” investigation into pay arrangements at the company.

He said:

The message is clear – that we need to ensure a much better alignment of remuneration with the long term success of this business.

The pay revolt today means that all bonuses paid to management will have to be approved by a future shareholders meeting.

Last month, Institutional Shareholder Services, which advises more than 1,700 of the world’s biggest investors, said:

There are considerable doubts about the appropriateness of the board’s past use of discretion in determining variable compensation for executives, and the remuneration system appears to lack appropriate safeguards against inappropriate or excessive pay.